Will Byrnes's Reviews > End This Depression Now!

End This Depression Now! by Paul Krugman
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Jul 01, 2012

it was amazing
bookshelves: economics, non-fiction
Read from June 20 to 27, 2012

Is what we are living through in the USA at present (2012) a recession, or something worse? And if so what can be done about it? In his latest outstanding book, Paul Krugman argues persuasively that we are indeed in another depression. Not as horrible as the one labeled “Great” but bad enough. He examines how we got to this state, what might be done to get the nation out of this depression, and considers the difficulties entailed with getting that done.

I cannot promise that after reading this book, the world of economics will become entirely clear, but you will definitely have a better big-picture handle on where we stand, economically, what should be considered to alleviate the problem, where resistance to sanity resides and why. You will learn about liquidity traps, Minsky moments, repos (nothing to do, unfortunately, with one of my favorite films, Repo Man), expenditure cascades, bond vigilantes and why it sucks to be on the euro when your economy is in the crapper. Krugman writes for a general audience, so don’t be intimidated by this jolt of jargon. He makes it all very understandable. Likewise the few charts that are included here are pretty simple, clear and illustrative. No arcane, Greek-symbol math to contend with.

Krugman is econ-Moses, trying his best to lead us all out of this mindless economic desert and into the promised land of prosperity. (Sorry, no burning Bushes atop that mountain) But those with a monopoly on golden calves seem happy to keep things as they are, and even some who might be able to tear themselves away from the odd Mammon-worship-fest, can’t handle admitting that they led us into this godforsaken land in the first place, and so refuse not only to ask for directions, but even to listen when they are offered. I picture the classic middle-schooler with hands over his ear, eyes tightly shut and yelling LALALALALALALALALA to drown out any incoming responsibility or truth.

Bottom line is that we are suffering from a crisis of low demand. Businesses are sitting on their assets. Yet, in order to get some forward momentum some actor needs to get out there and spend. The only entity capable of doing this is the federal government. The impact will be worth it, as investment now, whether in current employment or in rebuilding/improving infrastructure, will yield benefits long beyond the paychecks that will be generated in the short term. Krugman does the math, explains it all, and offers recommendations for how we can fix it.

However depressing the state of our economy might be, Krugman offers a map to get us to the Promised Land, if only leaders who count can get their heads out of the sand.

Links
A very informative Wall Street Journal article on Minsky and his moment
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Comments (showing 1-17 of 17) (17 new)

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message 1: by [deleted user] (last edited Jul 01, 2012 06:28AM) (new)

I love how Republicans scream that we need to grow the economny, as if Democrats don't believe in growth. They seem to think that we can cut our way to prosperity again. Although they accuse Democrats of wanting to tax our way to prosperity, somebody (Krugman)should point out to them that we already have historically low tax rates, which don't seem to be growing the economy. Also, Republicans claim that the stimulus failed, but stimulus was full of Republican tax cuts and the Keynesian "investment" portion was stimulus was cut way back. Is this right? Would Krugman agree?


message 2: by Jeffrey (last edited Jul 01, 2012 06:45AM) (new)

Jeffrey Keeten I love it whenever Krugman shows up on This Week with George Stephanopoulos as a counter weight to George Will. Hard for Will to score points against a man who won the Nobel prize for economics.


Will Byrnes I love how Republicans scream that we need to grow the economy
Just the usual lies and misdirections from the people who have been looting our national treasure since 1980. They seem, as a group, to take an unnatural pleasure in screaming. How sad they are, always the victim, never the victor, even when they win all the time. Whiny fracking babies, with the souls of bullies and the courage of fowl. It is a tactic that has worked for them, resulting, among other things, in persuading national media to present their take on things, even when it makes no sense at all.

somebody (Krugman)should point out to them that we already have historically low tax rates
he does. They do not care. They want taxes on their sponsors, not you or me, but the fattest cats to be zero, and when it reaches zero that will still not be enough. They will want overt support payments. (Actually that already exists for many such players). Bottom line is that nothing is or ever can be enough. They will scream, scream and scream because that is who they are and that is what they do.

Is this right? Would Krugman agree?
Yep. The stimulus was way too small to address the presenting problem

They seem to think that we can cut our way to prosperity again.
They do not give a fiddler's fart about growing the economy, only their piece of the pie. Their policies will lead to deflation, which works well for the monied class and makes the lives of working people even more hellish. Cutting government in the current economy will result in absolute shrinkage, not expansion of the economy.


Will Byrnes Krugman kicks ass, Jeffrey, every time he appears, which is fairly frequently. I particularly enjoy his appearances on Bill Maher.


message 5: by Jim (new) - added it

Jim Outstanding as always, Will. I have enjoyed and learned from Krugman's books and columns over the years, and I will clearly have to pick this one up as well.

As usual, I agree with all your comments in the review and the thread. I hadn't thought about the deflation angle, but you are correct of course - bondholders and those with large revenue/asset bases can increase their wealth while doing nothing, except for shutting down attempts by others to fix the problem. It is all so pathetic.


message 6: by Kris (new)

Kris I respect Krugman so much - his intelligence and his tireless directness in calling Republicans (and Democrats when they deserve it) on criminally bad economic policies. We can see evidence across the Atlantic that austerity programs only make serious economic crises worse. Unfortunately, empirical evidence, sound reasoning, and logic of any kind seem to be lost of the majority of Americans, particularly Republicans. I hope more people will sit up, listen to Krugman, and act.

BTW Will, your picture of Krugman as econ-Moses is wonderful and will stay with me, as will the burning Bushes pun. :)


message 7: by Richard (new)

Richard Derus Krugman is econ-Moses, trying his best to lead us all out of this mindless economic desert and into the promised land of prosperity. (Sorry, no burning Bushes atop that mountain)

I live on a sandbar in the Atlantic, but I have the *perfect* stake in my back yard: 70ft tall pine tree in sandy soil! We could rope Bush to it and set the needles ablaze, then the sap in the tree would make some serious conflagration happen!

What'cha say?


Will Byrnes Thanks all. I have enormous respect and admiration for PK. This is must read material, armoring one for the inevitable verbal battles with the forces of darkness, or, since they tend not to listen anyway, instruments with which to lead the uninformed to the land of understanding.


Will Byrnes sap in the tree
Sap for a sap. Poetic justice.


message 10: by Richard (new)

Richard Derus Will wrote: "sap in the tree
Sap for a sap. Poetic justice."


Heh. Somewhere on Facebook there was a photoshop job on Karl Rove, full front face, next to a ham loaf from the deli with the same glasses on it. I couldn't help wondering what the proper pairing for Bush would be...then I thought of one of those grisly shrunken heads with the stitched-up lips next to a photo of him grinning that inane grin.

Still making me chortle.


message 11: by Jim (new) - added it

Jim Awesome comments, everybody.


message 12: by Ted (new)

Ted Paul Krugman is certainly my favorite mainstream economist, and I do like his writings. Unfortunately I'm not so sure he really understands the nature of the economic crisis we are moving into, or at least doesn't want to talk about it if he does.

The paradigm of growth-capitalism is doomed. It is not sustainable. The U.S. economy is driven by consumerism. If the rest of the world consumed like we do everything would have crashed already. This consumerism is manifestly unsustainable. Both of these unsustainable forces are wreaking havoc on the entire planet, as more and more resources become scarcer and scarcer, to say nothing of the effect they are having on the living species (the biosphere) of the earth, and the interconnected environmental systems which support human life and civilization. (And technology will not save us; some technological innovations will make a small difference here and there, but that's about the most that can be expected.)

Thus I find it disconcerting (no, depressing is more like it) that mainstream economists, politicians, and the public in general argue back and forth about the proper way to fix an economy which must be not fixed, but changed if our aim is to do something meaningful and relevant for future generations. Steady-state economies need to be "invented" to replace the growth paradigm economy of the 20th century, if anything like our current human civilization is to be around in the next century. None of us will be around to see a successful ending to this tale. Unfortunately some of us may be around to see a bad ending, if that's the way it's going to turn out.


message 13: by Will (new) - rated it 5 stars

Will Byrnes While I do not disagree with you Ted, I expect that the sort of fix advocated by Krugman is the best viable solution, for now. The sort of sustainable vision you have seems unlikely to occur as long as those in power are creatures of the current corporate overlords, and I am not optimistic about that changing any time soon. Perhaps one path on the way forward you see is that of local efforts at sustainability, as advocated by Jim of comment #11.


message 14: by Jim (new) - added it

Jim Thanks for the props, Will! Ted, I agree with all of the points that you are making - for the long-term, and as soon as possible.

I also think that Will is correct about the short-term. The current power structure does not acknowledge the problems that Ted so correctly points out. And the global economy is at a tipping point because of the very abuses that Krugman (and Will) talk about. There is an imminent prospect for deep poverty, worldwide, and on a much more massive scale than it currently exists. And no accountability at all among the corporate/banking elite. (my view)

I have to leave shortly, but will try to circle back for a more detailed comment this evening. But I do see an opportunity for a lot of fixing at the local, community level, below the radar of the ugly corporate machine.


message 15: by Traveller (new) - added it

Traveller Thanks for this review, Will- thanks to you I'm a-getting hold of this book ASAP. :)


message 16: by Ted (new)

Ted Will said "I expect that the sort of fix advocated by Krugman is the best viable solution, for now."

Yes, put in those terms, you may be right. But what is the bridge between this fix "for now" and a revolutionary rethinking of our growth-capitalism vision of the "Promised Land", which of course is the epitome of unsustainability.

"local efforts at sustainability" Yes, that is about all the ordinary citizen can do at this point. I am deeply involved in the Transition movement. As Rob Hopkins has put it (paraphrasing slightly) "If we act as communities, what we accomplish might be just enough, just in time." So, fight the good fight, with the realization that (on a bad day) it will come to naught, and (on a good day) it might at least help.

I have no influence over economic policy, so reading a book like Krugman's seems, for me, a waste of time. Sure, I wish he was in the policy making arm of this administration. Millions of people would probably be better off. But looking at the index of his book, I see 3 brief mentions of Occupy Wall Street, no mention of Citizens United, no mention of local banks or local currency, no mention of GPI (Genuine Progress Indicator) but 20 or more references to the good old GDP, 16 references to consumer spending. There's a single reference to anything "sustainable" - it is to the CBO concept of "sustainable output", which Dr. Krugman explains in this way : "think of it as what would happen if the economic engine were firing on all cylinders but not overheating - an estimate of what we could and should be achieving." Sustainable? Ha!

On the other hand, I am sure that much of what Krugman says would strike as me "spot on", I am at least a former member of the choir. He has a lot to say about income inequality, he appears to contrast much of the horrid economic policy in the U.S. with some of the social democratic policies of Europe, etc. And it is no doubt extremely important that the mess we are still in from the crash four-five years ago be cleaned up to the advantage of the millions of people who have seen their lives crushed in these few years. I'm all for this! (Little that I can do to bring it about it, however - including reading books like this.)

Here are some books that I would recommend instead. But let me admit right now that even though I own several of these books, I have never read any of them! Chalk that up to a couple things: again, the feeling that my knowing anything about these new ways of economic thinking, and new economic insights, could have little effect on anything; but perhaps more importantly, a feeling of dread that these books would prove to be naive, simplistic, utopian - you name it. However, I would be happy to agree to read any of these books if someone else was interested in doing the same -perhaps we'd both learn something useful.

Prosperity Without Growth - Tim Jackson; The End of Growth - Richard Heinberg; Limits to Growth - the 30 year update - Donella H. Meadows; The Crash Course - Chris Martenson; The Post Carbom Reader - Richard Heinberg, ed.; The Wealth of Nature: Economics as if Survival Mattered - John Michael Greer


message 17: by Ian (new)

Ian Grayejoy Who is going to spend without borrowing?


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